How sea level rise will take bite at U.S. real-estate value
Thursday, August 23, 2018, 12:08 - As sea level rise driven by climate change continues to impact many coastal areas of the U.S., real estate values could begin to tumble.
Flooding has worsened in many coastal communities, but not just during extreme events like hurricanes, but also during periods of heavy rain, and even high tides.
Sea level rise forecasts and mapping have become increasingly precise, allowing researchers to pinpoint what individual properties could be underwater in a certain time frame. The sea has risen about 8 inches since 1900, with three of those inches reported post 1993. Scientists predict it could rise another 3 to 7 inches by 2030 depending on several factors including, greenhouse gas emissions globally.
Sea level rise for U.S. -- NOAA
A study published in the Journal of Financial Economics discussed the price effect of sea level rise on real estate. Homes exposed to sea level rise sell on average for approximately 7 per cent less than observably equivalent unexposed properties equidistant from the beach. The most vulnerable properties, those that could be flooded after seas rise just one foot, were selling at 14.7 per cent less.
According to the study led by Asaf Bernstein, professor at the University of Colorado Boulder, this discount has grown over time and is driven by sophisticated buyers and communities worried about global warming.
Effect of elevation on appreciation in the area of Miami-Dade County, Florida.
When it comes to sea level rise and city flooding, one of the most researched areas in the country is Miami-Dade County in Florida. A study conducted by Harvard University professor Jesse Keenan, published in Environmental Research Letters, discusses "climate gentrification."
It suggests that a consumer preference may exist in favor of higher elevation properties. Likewise, lower elevation properties may be subject to lower rates of appreciation (see above) due to flooding concerns. With future sea level rise predictions in mind, these preferences may become more robust and may lead to more widespread relocations that serve to gentrify higher elevation communities.
Also on the list is the city of Charleston, South Carolina. First Street Foundation, a non-profit organization following up on sea level rise and educating millions of Americans on the impact it may have on them, released an analysis showing that homes in Charleston have lost $266 million in value since 2005 due to coastal flooding, and the concern of higher levels in the future. A value that was close to $465 million in the Miami-Dade area.
Sea level rise in Charleston, South Carolina -- NOAA
For Susan Watcher, a professor of real estate at the University of Pennsylvania, the overall effect on prices appears to be smaller than what others say. Despite all of the discussion on sea level rise, storms and flooding last year, coastal property appreciation continues and so does coastal development. Beachfront property is not necessarily declining in value. It's a matter of coastal homes in some areas not going up as fast as their inland neighbors.
Other experts and home owners in the Charleston area do see a decline in the value of property. Norm Levine, director of the Lowcountry Hazards Center at the College of Charleston, says that 1 per cent of buildings in the city now experience annual flooding. The 50 year estimate is that 15 per cent of the buildings will be affected.
Flooded home in Rhode Island -- NOAA
Although many markets are at risk across the United States, especially those along the Atlantic Seaboard, some property owners do not think much about what could happen 100, or even 30 years from now. Most coastal real estate markets have not yet been harmed by sea level rise projections. But overall, experts are warning that as the pace of property damage increases during the next few decades, we will likely see a decrease in their value and a good number of communities suing for climate change related damages.